Chapter 3, Problem 29P

Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2021 (credit balances indicated by parentheses). Michael acquired all of Aaron’s outstanding voting stock on January 1, 2017, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company’s stock actively traded at $23.50 per share.     Michael Company12/31/21   Aaron Company12/31/21 Revenues $ (610,000 )   $ (370,000 ) Cost of goods sold   270,000       140,000   Amortization expense   115,000       80,000   Dividend income   (5,000 )     0   Net income $ (230,000 )   $ (150,000 ) Retained earnings, 1/1/21 $ (880,000 )   $ (490,000 ) Net income (above)   (230,000 )     (150,000 ) Dividends declared   90,000       5,000   Retained earnings, 12/31/21 $ (1,020,000 )   $ (635,000 ) Cash $ 110,000     $ 15,000   Receivables   380,000       220,000   Inventory   560,000       280,000   Investment in Aaron Company   470,000…

Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2018 (credit balances indicated by parentheses). Michael acquired all of Aaron’s outstanding voting stock on January 1, 2014, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company’s stock actively traded at $23.50 per share.On the date of acquisition, Aaron reported retained earnings of $230,000 and a total book value of $360,000. At that time, its royalty agreements were undervalued by $60,000. This intangible was assumed to have a six-year remaining life with no residual value. Additionally, Aaron owned a trademark with a fair value of $50,000 and a 10-year remaining life that was not reflected on its books. Aaron declared and paid dividends in the same period.a. Using the preceding information, prepare a consolidation worksheet for these two companies as of December 31, 2018.b. Instead of the initial value method, assume now that Michael…

Following are separate financial statements of Michael Company and Aaron Company as of December 31, 2024 (credit balances indicated by parentheses). Michael acquired all of Aaron’s outstanding voting stock on January 1, 2020, by issuing 20,000 shares of its own $1 par common stock. On the acquisition date, Michael Company’s stock actively traded at $32.50 per share. Accounts Michael Company 12/31/24 Aaron Company 12/31/24 Revenues $ (689,500) $ (418,500) Cost of goods sold 309,750 164,250 Amortization expense 119,700 101,500 Dividend income (5,000) 0 Net income $ (265,050) $ (152,750) Retained earnings, 1/1/24 $ (1,002,000) $ (730,000) Net income (above) (265,050) (152,750) Dividends declared 90,000 5,000 Retained earnings, 12/31/24 $ (1,177,050) $ (877,750) Cash $ 192,000 $ 19,100 Receivables 447,000 231,000 Inventory 642,000 365,000 Investment in Aaron Company 650,000 0 Copyrights 545,000 387,000 Royalty agreements 1,001,000 416,000 Total assets $…